$300 for three guys.

Once you factor in the girlfriend subsidy, they would have made better money with far less risk by getting shifts at local fast food restaurants.

He said they only worked for about 3 hours.

Even if you take out $75 for the GF subsidy (being generous and assuming she gets an equal share), each guy made $25/hour, cash (i.e. ~$30-$35/hour pre-tax), which is >3x what they'd get at a fast-food joint.

Now of course, one does need to take into account the fact that they're restricted in spending their loot on beer, which they are obligated to share. From a short-term economic standpoint this is probably a significant hit on their profits (i.e. unlikely that the three gentlemen will consume the majority of the beer). However, from a longer-term/more holistic view, purchasing beer for the group will surely lead to fun, team building, general goodwill, and so on, which is arguably more valuable than the $300 cash at this point in the startup's lifecycle.

tl;dr startups should use aeron-chair arbitrage to fund investment in beer, it's science.

The 3 hours doesn't include the research and preparations required to pull off this deal, so it's not a reliable number to be thrown around.

Wouldn't the $25/hour still be taxable? (I understand that nobody pays taxes on small cash amounts, but if we're considering its viability as a business it seems unfair to compare one option with tax evasion and one without.)

Definitely true, but the tax evasion is made possible by the nature of the work (i.e. it's not an option at all in the fast food job)

its a proof of concept. through iterations the business can grow. I think this first painful experience is how many large retailers or wholesalers got established.

Why is your conclusion that it can't scale? You are making 20% profit on these chairs. There are many people you can pay 30% of your margin and they'd be happy. You can automate the buying and selling, sourcing people who can do the "heavy lifting." Actually, you can use your site to facilitate it.

In this case the $300 was for 2 (maybe 3?) people. Not to say one person couldn't have done the work on their own, though.

Agree 100%. However we had to front $1500 in capital and we nearly lost it all when the check initially wouldn't clear.

I used to do lots of reselling and arbitrage on Craigslist during my poor student days. Here's my experience.

As a general rule of thumb, always ask for cash. Or ask for a cashier's check if the buyer is not comfortable with carrying large of cash around. Don't accept anything else (e.g. personal check or even paypal).

What about square?

I refused to deal credit card based payments b'c of chargebacks risks. With chargebacks, the credit card company will always side with their customers, often leaving the seller with no recourse to retrieve the money or the item sold.

In addition, there are enough scammers lurking around on craigslist that I didn't want to expose myself to those kinds of risks.

I was also buying/reselling items with fairly low-margins. Credit card processing companies e.g. square, paypal, etc. will only eat away at whatever little profit I was making at the end of the day.

In my experience, many Craigslist buyers (especially of high-value / high-margin items) tend to be rather afraid of buying things on Craigslist, and would be unlikely to swipe their credit card with the seller's phone. Naturally this tendency will vary from market to market, and SF would probably be a good place to experiment with using Square in CL transactions.